In late 2007, our local paper, the Charlotte Observer, ran a series of stories where they painted all real estate professionals as nothing more than greedy, lying, boogie men.  Their articles were nationally featured and even led to a number of laws being written and passed in Raleigh to protect the public from us greedy bastards.  One was the outlawing of No-Doc loans in North Carolina and another was the  disclosure of any bonuses real estate agents were paid. 

For years, the North Carolina Association of Realtors had a form for agents to have their clients sign acknowledging they were receiving a bonus on top of their normal commission.  The Observer found buyer clients from one local real estate firm (no longer in business) that said they were unaware of any bonuses paid to their agents, hence the law. 

I've never had a problem with the disclosure then or now but I've never understood the role of the agent bonus.  Instead of lowering the price of the house or offering the buyer a concession like paid closing costs, sellers are banking that agents would show and sell their home over one where a bonus wasn't offered.  A bonus could range from a few hundred dollars up to over $20,000 on top of the buyer agent's commission.  One house currently for sale in Union County has a $25,000 bonus. 

This is all well and good if two things were true which aren't: 1. Agent's only show and sell homes with bonuses and 2. A buyer can be pushed into purchasing a home they didn't want at a price too high only to line that agent's pockets.  Seller's need to remember that it's the buyer purchasing the house, not their agent.  Over compensating the agent more for their buyer picking your house over another is all well and good but it is COMPLETELY INEFFECTIVE in actually selling your home. 

Case in point are the Charlotte area sales figures for December.  In the entire CMLS, only 791 of 19,101 are offering an agent bonus above $1.  In December, 1,280 properties sold, 42 of which offered an agent bonus.  The bonused properties sold in 138 days while the rest of the solds sold in 110 days. 

There was a slight difference in what sellers received: 88.63% of their original asking price for the bonuses properties, 86.72% without.  That figure includes any additional seller concessions as well. 

The average bonus paid in December was slightly over $2,000. 

There remains 791 homes on the market where a bonus is offered and they remain unsold.  39 of those bonused properties are offering more than $10,000 and their average days on market currently stands at 236. 

In 2008, 23,413 single family detached homes sold in the Charlotte area, 78 of which offered a bonus in excess of $10,000.  The bonused properties sold on average in 113 days while the average for the other 23,335 was 98.  For as little of a return as they offer, agent bonuses do very little to sell properties.  So what's a seller to do to get their home sold?

First, price the home to sell.  If your agent isn't having a conversation with you about your price, kick them to the curb.  In a market where you have an abundance of inventory and a shortage of qualified buyers, price is key.  After all, that buyer can go down the street and purchase a very similar home for less. 

Second, stage the home.  Your home must be ready to sell.  One colleague of mine describes the market as a beauty contest.  If that home doesn't match the price you're offering, it will be near impossible to convince buyers it's worth what you're offering. 

Finally, sellers need to be flexible.  Overwhelmingly, successful sellers are offering seller concessions to put the transaction together whether that's a club membership or closing costs.  Most concessions were less than $2,500.  This goes much further to seal the deal with a potential buyer than giving his agent a bonus. 

For as little result that bonuses offer (if any), sellers would do far greater to stage the home or offer to assist their listing agent with newspaper advertising costs than paying the buyer's agent a bonus.  After all, as much as my clients love me, there's not a single one willing to pay an additional $20,000 more for me. 

Jonathan Osman

Charlotte NC Real Estate